Consumption smoothing and vunerability in Russia

Gerry, C.J.;
Li, C.A.;
(2007)
Consumption smoothing and vunerability in Russia.
(William Davidson Institute Working Papers
885).
The William Davidson Institute at the University of Michigan: Michigan, US.

Abstract

Applying bootstrapped quantile regression to the Russian Longitudinal Monitoring
Survey (RLMS) data, we examine the channels through which individuals experience
and seek to cope with changes in consumption. We find that married individuals living
in small households, with educated heads in urban areas are better equipped to smooth
consumption. Investigating the impact of idiosyncratic shocks, we find that the labour
market is an important transmission mechanism allowing households to smooth their
consumption but also exposing them to risk, mainly through job loss. Outside of pension
payments the formal social safety net does not facilitate consumption smoothing, thus
heightening the importance of informal coping institutions. It transpires that both
support from relatives/friends and home production act as important insurance
mechanisms for the most vulnerable.